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Strategic Information Architecture:
Strategic, Tactical and Operational Business Intelligence

online columnist Kevin Quinn     Column published in DMReview.com
May 11, 2006
  By Kevin Quinn

Business intelligence (BI) software is applied at three different levels in the enterprise: strategic, tactical and operational. At the strategic level, BI provides performance metrics to management and executives, often in conjunction with a formal management methodology such as Balanced Scorecard or Six Sigma. Strategic business intelligence, one of the latest crazes, is generally called performance management (PM). Depending upon which analyst firm you subscribe to, PM might be preceded by a C for corporate performance management, an E for enterprise performance management or a B for business performance management (not to be confused with BPM, the acronym for business process management).

Tactical business intelligence, called traditional and/or analytical in various industry articles, is the application of business intelligence tools to analyze business trends, frequently comparing a specific metric (such as sales or expenses) to the same metric from a previous month or year. In most companies, there are usually a few analysts in each department who use online analytical processing (OLAP) and ad hoc query to perform this task. To date, BI tools are mostly used to analyze historical business data to discover trends or anomalies that need attention.

Finally, operational business intelligence delivers information to the point of business - the front lines of a business where information is used as part of an operational process. For example, when a person calls a toll-free number to speak to a customer service representative about his or her telephone bill, that representative will most likely be looking at a report about the caller's previous billing history and payment record on a computer monitor. The most interesting thing about this example, as in many examples of operational BI, is that the person using the BI tool has probably never even heard of the term business intelligence. Customer service reps do not consciously use a business intelligence tool. The information is simply put in front of them when they're doing their operational jobs - in this case, customer support.

Figure 1: Strategic, Tactical and Operational BI

Strategic, tactical and operational business intelligence are like the navigation system, the dashboard, and the gas pedal, brake pedal and steering wheel in an automobile. The navigation system constantly shows you whether or not you are on course to reach your destination. This works exactly like a strategic BI scorecard or performance management system that tells management whether or not the company is on target to meet its goals. In both cases, the driver and management will take corrective action if they see that they are off course.

The dashboard, with its fuel gauge, odometer, speedometer and engine lights, mimics tactical business intelligence. The gauges tell the driver how far he or she has traveled, if the car's systems are functioning correctly and whether or not more fuel is needed. Similarly, tactical BI looks at historical data to see if enough has been sold compared to last month and whether or not there is inventory to meet expected demands.

Finally, operational BI is very much like the steering wheel and the gas and brake pedals, which are used for all immediate front-line reactions in driving. There is a detour in the road; you must turn right here to avoid it. A car in front of you has stopped, so you need to slow down and stop as well. The customer support call is handled in the same way. It is an immediate reactive business process.

Now let's look at the importance of these automotive systems to the car and driver and of the three levels of BI to the company. Of the three levels of automobile components - navigation system, dashboard, and steering, brake and gas - which can you not live without, even for one second? The steering, brake and gas. Without them, you would either crash or potentially make no progress. The same is true for operational BI. While strategic and tactical BI look at historical data to tell management and analysts where the business has been and how it is performing, it is the company's operational processes that keep it running. Ask the corporate executive whether the company could live without its performance scorecard report or without the customer support system for a day or two. Customer support cannot stop. It is part and parcel of how a business operates.

Many people can drive a car with just a steering wheel, gas pedal and brake, and even get to their final destination. Sooner or later, however, they will either run out of gas or get lost. It is the same for business. To truly get the most out of business intelligence, you need to have all three levels - strategic, tactical and operational - working in conjunction with one another. However, a business executive cannot forget the importance of operational delivery of information to front-line workers - without it the company might crash.


For more information on related topics visit the following related portals...
Business Intelligence (BI) and Strategic Intelligence.

Kevin Quinn, vice president of Product Marketing at Information Builders, researches new technologies for acquisition or adoption and defines the strategy and road map for the WebFOCUS business intelligence platform. In his 22 years of experience in IT, Quinn has helped companies worldwide develop information deployment strategies that accelerate decision making and improve corporate performance. Quinn is also the founder of Statswizard.com an interactive sports statistics Web site that leverages business intelligence functionality. You can reach him at KevinR_Quinn@ibi.com.

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